... At this point I'm thinking the pads just need to wear in, we do all this thinking and it's ends up being your first guess anyways haha. All I can do is try to run it for a bit like this and see what happens
Ya I think you're right...
I took my calper piston out again and oiled the mechanism.
Turns out it was seized but I got it out.
(I still don't know where that c-clip is from ?)
The inside of the piston.
Once everthing was oiled (normally lubed by the brake fluid.) it started moving.
I can now pull the piston in and then the whole adjustment mechanism rotates.
So your you're adjustment screw should just rotate too even when it's fully retracted (although with slightly more torque)
Either way, if your brakes do seat themselves and your brakes aren't dragging, keep an eye on the number of clicks your P-brake handle has and if they always keep grabbing.
If your handle keeps pulling higher and higher until they no longer grab then your self adjusters aren't working.
Then your brake pedal goes closer and closer to the floor before your brakes grab.
Brake pedal height is adjusted by the self adjusters in the rear brakes.